Opinion
No. 78-1007
Decided April 26, 1979. Rehearing denied June 7, 1979.
Insurer brought action against person involved in accident with its insured, but as result of disposition of earlier action by the insured against the same defendant, trial court invoked doctrine of res judicata, and dismissed action. Insurer appealed.
Reversed
1. JUDGMENT — Res Judicata — Existence of Privity — Before Judgment — Determinative — Subrogee's Claim Barred. Where action by insured against alleged tortfeasor was dismissed with prejudice, and insurer, as subrogee, later brought action against the alleged tortfeasor, the applicability of the doctrine of res judicata to bar that claim is dependent upon whether the insurer had acquired an interest in the subject matter affected by the judgment after rendition of the judgment of dismissal; thus, if insurer's subrogation right did not mature so as to place it in privity with its insured until after the earlier action was dismissed, then res judicata would bar its later claim against the alleged tortfeasor, but if the insurer had already acquired its subrogation right prior to dismissal of the earlier action and the alleged tortfeasor knew that the insured had acquired that right, then the subsequent action by the insurer against the tortfeasor would not be barred by res judicata.
Appeal from the Superior Court of the City and County of Denver, Honorable Charles Bennett, Judge.
Michael E. Katch, for plaintiff-appellant.
Leland S. Huttner, for defendant-appellee.
We reverse the summary judgment which dismissed the complaint of plaintiff, Bankers and Shippers Insurance Company.
The following facts are not in dispute. In June of 1976 an accident occurred between Bankers' insured and a vehicle owned by defendant, Curtis, Incorporated. The insureds filed a civil action against Curtis in the Denver District Court to recover for personal injuries and property damages. Bankers was aware that this action was pending, but did not seek to intervene.
The record reflects that the insureds' complaint was amended. Then a stipulation was signed between the parties to that action wherein they agreed that a second amended complaint could be filed. While the parties agree that the purpose of the second amendment was to withdraw the property damage claim which Bankers is now asserting, the second amended complaint was not filed.
Based upon the failure of the insureds to cooperate with their attorney, the district court entered an order allowing the attorney to withdraw. The case was thereafter scheduled for trial on March 17, 1978, but the insureds failed to appear, and the court granted defendant's motion to dismiss the case with prejudice.
On June 9, 1978, Bankers filed this action against Curtis alleging that it was subrogated to and therefore entitled to assert the insureds' claim for property damage. The superior court granted Curtis' motion for summary judgment, concluding that the previous district court judgment barred Bankers' complaint under the doctrine of res judicata. The parties agree that the doctrine of collateral estoppel is not involved here because the property damage claim was not litigated on its merits in the district court action. See Pomeroy v. Waitkus, 183 Colo. 344, 517 P.2d 396 (1973).
We conclude that there are material issues of fact to be resolved, and thus, entry of summary judgment was improper. C.R.C.P. 56.
For the doctrine of res judicata to apply, it must appear that Bankers was a party to the prior action or in privity with its insureds. Pomeroy v. Waitkus, supra. Bankers was not a named party and the record does not reveal whether it was in control of the litigation so as to be considered a party under the doctrine of res judicata. See Murphy v. Northern Colorado Grain Co., Inc., 30 Colo. App. 21, 488 P.2d 103 (1971); see also Employers Mutual Casualty Co. v. Hanshaw, 176 N.W.2d 653 (Iowa 1970).
[1] For purposes of the doctrine of res judicata, privity means that one has acquired an interest in the subject matter affected by the judgment through one of the parties after rendition of the judgment. Murphy, supra. However the record does not establish when Bankers acquired its right of subrogation. If Bankers' subrogation right did not mature by payment of the claim until after the judgment of dismissal was entered, then entry of judgment for Curtis in this case would be correct. See Federal Insurance Co. v. Plaza Drugs, Inc., 333 F. Supp. 1305 (D.D.C. 1971). If, on the other hand, Bankers had already acquired its subrogation right by payment of the claim prior to entry of the judgment of dismissal and Curtis knew that Bankers had acquired this right, the judgment of dismissal against the insureds would not bar Bankers' claim. See Calvert Fire Insurance Co. v. James, 236 S.C. 431, 114 S.E.2d 832 (1960); see also Hubbard v. United States Fidelity Guaranty Co., 430 S.W.2d 607 (Mo.App. 1968).
The judgment is reversed and the cause remanded with directions to reinstate Bankers' complaint and for further proceedings consistent with the views herein expressed.
JUDGE SMITH and JUDGE STERNBERG concur.